CSR strategies
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Table of contents
Basic components of Corporate Social Responsibility -extractive industries. 6
Requirements for CSR strategies and reasons for engaging in CSR.. 7
Extend of CSR initiatives and level of performance in developed and developing countries. 9
Introduction
Corporate Social Responsibility (CSR) is a concept that has gained prominence in many companies including extractive ones. CSR is one of the business strategies that these companies are using to participate in the sustainability of the environment as well as the community. It is one way of giving back to the societies in which they operate.
In developed countries, the scenario is considerably different. Such countries have an already developed infrastructural and social sector. They are therefore involved in well-established CSR programs which have international set standards. These programs’ main aim is to enhance the competitiveness of these extractive industries in the international market. In addition, developed countries unlike the developing countries have readily adopted these CSR policies and strategies with great support from their government. An exemplary country with well-established CSR programs in its extractive industries is the Canadian gas and oil mining industries. This paper deliberates on whether extractive industries embrace CSR to best of their abilities and any performances variations in developing and developed countries. Development and definition of CSR are incorporated as well as critical examination of various literatures on the mining industry among many other aspects relating to the topic.
CSR and its Origin
According to McWilliams & Siegel (2001), the term Corporate Social Responsibility even though has been in the public domain for many decades, it became popular in the 1960s and is nowadays used indiscriminately in organizations more to further moral and legal responsibilities. Definition of the term CSR is both complicated and complex because of the context and nature of the problems. The complexity arises from the fact that CSR is intimately involved in the society, ecology, and economic systems that are high complex dynamic systems (Sheehy, 2015). Regardless of these complexities, in general CSR is defined as a form of corporate self-regulation entrenched in the business models of companies. Its main role is to act as a self-regulatory mechanism through monitoring business to ensure that they comply with the spirit of law, national or international norms, and ethical standards. Some firms that have implemented CSR have gone beyond compliance to engaging in acts that promote social good, and beyond the interests of the firm (Sheehy, 2015). CSR as well involves the corporate actions aimed at encouraging positive impact on the stakeholders including employees, consumers, investors, communities and others as well as impacting on the environment.
Literature review
According to Littlewood (2014), different people, ascribe different meaning to the term CSR. In 2001 European Commission Green Paper, CSR is defined as the concept where “entities integrate social and environmental concerns in their operations as well as their interactions and association with stakeholders on a voluntary basis” (Littlewood, 2014, p. 17). CSR in the mining industry therefore, ought to be on voluntarily basis if this defining is to go by.
Various institutions and initiatives have also been advanced to ensure that mining industries remain compliance and engage in social corporate responsibilities. Such initiatives include the International Council on Mining and Metals (ICMM) and Mining and Minerals Sustainable Development Project (MMSD) (Littlewood, 2014). Other initiatives include corporate reporting on companies’ websites and engaging with ISO 26000 social responsibility performance measurements, development of best practices, toolboxes, and guidelines relating to CSR issues such as mining community development and sustainability and mine closure among many others (Littlewood, 2014).
Despite the growth of CSR initiatives in industries, many questions remain about the role of mining in economic and social development remain unanswered (Du Venage, 2015). A good case is South Africa where despite discussion of CSR in the industry, there are still questions on the depth of the adoption and implementation and the extend this has impacted on the social and economic industry in South Africa.
According to Littlewood (2014), mining industry in Namibia contributes around 16 percent of the GDP and close to 50 percent of the merchandise exportation. This means that it is a central industry in the economy of Namibia. Mining began between 1884-1915 under the Germany colony. Copper mining started in 1906 in the northern region also known as German South West Africa at that time. Diamonds were also found in the South West in 1906. Mining since 1970 has become diverse in Namibia and more minerals such as gold and zinc are mined. Companies involved in mining have managed to deal with issues of community sustainability and viability after mining through their CSR. This has been done in different ways. The government also has laws that require compliance to legal requirement. For instance, after mining, all structures and buildings are removed as per the license terms (Littlewood, 2014).
According to Kirschke (2014), mining industries are impacting negatively on the lives of many people especially is DRC, a top cobalt and the sixth copper producer nation. Kirschke (2014) further argues that CSR activities of some of these companies are not working as expected and therefore what they do can be described as, “Greenwash”. He argues the companies have caused community displacement, and caused environmental wreckages.
According to Arko (2013), mining industry in Ghana has been in operation for close to one hundred years. The companies to a large extent have been doing well and this has enabled them to participate in corporate social responsibilities. They have supported the communities in different ways through CSR. Nevertheless, the support provided by these companies has been small and has not made any substantial differences. The Ghana Chamber of Mines reports of these expenditures exemplify this fact. The way forward, is to ensure that appropriate measures are in place to ensure that these companies participate in CSR (Arko, 2013).
Stakeholder in the mining industry such as the government, mining companies, civil society, international financial organizations among others have a role to play in the operations and CSR engagements of mining industries (Yakovleva & Vazquez-Brust, 2012). Mining companies have to develop plans that will ensure that they do not pollute the environment and contribute to climate change. They have as well to ensure that they support the welfare of the people in the community. The level of commitment of different countries when it comes to implementation of CSR has varied. These variations are because of different reasons such as the negative perception in relation to the industry, controversial nature of many mining investments, social and environmental externalities that for decades have been associated with the mining industry. Other reasons are the weak legislations and ability of states to monitor the activities of mining companies across the globe (Kirschke, 2014).
Basic components of Corporate Social Responsibility -extractive industries
Different extraction companies have adopted different CSR programs basing on the type of the environment they are based upon. A CSR program has to be formulated with regard to the situation at hand. A typical CSR program should encompass the main areas of the community including social, environmental and the economic factors of a community.
A CSR policy entails the approval of the company by the local community. Furthermore, an extractive company ought to be involved in the community activities, such as involvement in local charities as well as supporting the local growth and sponsoring the community events. Adopting a CSR program entails the consideration of the three aspects including people, the planet, and the profits. The deviation in the corporate motives from profits oriented operations to adopting the CSR program can be associated to the worldwide change in the conscience of the corporate (Kirschke, 2014). The deviation entails that the corporates exercise four particular responsibilities in addition to generating profits.
The main environmental factors that the policy should encompass include the sustainability of the environment through waste recycling as well as proper waste management strategies. Other approaches include provision of clean water for use, the establishment of renewable sources of energy and the recyclable materials. It is the role of the extractive industry to maintain an appropriate working environment as well decent social appearance.
As much as CSR strategy is aimed at the voluntary social responsibilities, it is also important to make sure that the economic aspects of the community are take account of. A good CSR program should seek to promote the economic status of the community and at the same time that of the extractive industry. The economic roles apply particularly to the developing countries that are in the verge of establishing development for their countries. For instance, an appropriate CSR strategy for extractive industry in developing countries is the establishment of infrastructure and improvement of the communication networks in the regions.
Requirements for CSR strategies and reasons for engaging in CSR
One s the strategies is sustainability whereby Corporates establish a foundation and come up with ways of avoiding harmful effects of the mining activities in the environment t they operate in. The CSR program should have the capability of sustaining the environmental as well as the economic aspects of the community. License is another important aspect as each extraction industry should be legitimate and should satisfy all the legal requirements. To prove the legitimacy the company should obtain a letter of approval accompanied with a license for operation.
In addition to the license for operation and sustainability, the CSR should also comprise of a moral obligation meaning that it has responsibility to do the right thing, uphold the ethical values pertaining to all the activities the company is involved in. The company’s long-term commitment to social responsibility is also important when ascertaining the well-being of the company to the commitment to CSR (Kirschke, 2014). The establishment of a good past relationship is important in ensuring that the extractive company is well acquainted to the CSR responsibilities.
In addition to the effectiveness of branding, companies have developed a new trend in enhancing their CSR programs. Companies with well-developed CSR programs are perceived more positively than those with poorly developed CSR programs. It is important to have a mission and vision that goes beyond the profit driven purpose. Such companies give the stakeholders as well as investors a warmer and better image and an impression that it will be easy to interact with (Arko, 2013).
Extractive corporations engage in CSR programs so as to have an easier time when dealing with the government regulations (Arko, 2013). The better the relationship a corporation will establish with the immediate society, the better the perception of that corporation in both the legal as well as in the public perspective. The participation of the extractive corporation in the society’s social responsibility will also bar the company from harmful activists that may launch against it. Lastly, one of the main benefits of CSR in the workplace is the appropriate working environment created for the employees as well as for the occupants of the society. CSR creates a sense of community and teamwork between the society, stakeholders, and generally the overall corporation(Kirschke, 2014).
Extend of CSR initiatives and level of performance in developed and developing countries
A number of international CSR initiatives and associations that promote CSR policies in the extractive industries include the United Nations global contact initiative where the extractive companies perform self-evaluations and report their performance in regard to the ten principles. Another international initiative is the Europeans commission strategy for CSR and sustainable consumption sustainable industrial policy (Miningfacts.org, 2015). The global committee on mining and metals is managed by the largest mining companies and comprises of a number of programs to improve sustainable mining. Extractive companies additionally, have started pursuing certifications such as ISO 14000 which is an environmental certification. SA 8000, which is a working standard certificate, and also AA 1000 which is accountability certificate (Miningfacts.org, 2015).
Canada
Canada is one of the developed countries that have embraced CSR programs in its extractive industry. The Canadian extracting industries has laid out a foundation to ensure that there is greater rationality in the advancement of the sector’s in the Canadian extractive sector is a well-defined strategy as pertains to other developed countries (Andrews, 2007). The CSR strategy for the enhancement of business and prosperity consists of four major provisions. Examples of CSR strategies implemented include promoting the industry, securing access to global markets, improving infrastructure among others.
The government of Canada has enhanced international performance guidelines for the Canadian extraction companies. Such guidelines include first, the social and the environmental sustainability for the mining projects with potentially harmful environmental and social repercussions (Miningfacts.org, 2015). Secondly, the guidelines on voluntary principles on human rights and security for projects involving public or private security forces (Miningfacts.org, 2015). The global reporting initiative for CSR is the other guideline for reporting by the mining sector. Canada has therefore, succeeded in its CSR initiatives in this sector.
Developing nations in Africa and Asia have also embraced CSR initiatives in extractive industry due to various reasons such as prevention of pollution, conserving environment, adhering to international codes, take advantage of the natural resources to achieve economic and social development as well as protect its environment among other reasons (Mzembe, and Downs, 2014). Most of the African countries have devoted their CSR efforts in protection of the environment, social economic development, and improvement of infrastructure (Smith, 2008). Various African countries that have adopted the concept of CSR include; Mali, guinea, Tanzania South Africa and Nigeria among others (Mzembe, and Downs, 2014).
South Africa
In the recent past, CSR has become globally popular accompanied by widespread management methodologies, technologies, and new ideologies. The impact of the CSR in South Africa has seen great developments with increased social responsibility and sustainability of the countries mining industries. The CSR initiatives in South Africa’s mining industry have resulted to increased communities growth as well as infrastructural development. The major impacts CSR in South Africa’s mining industry include; increased efficiency in the societal gains pertaining to the aspects energy and water usage. In addition, safeguarding of the environment has been more efficient following the establishment of CSR policies by the mining industries. Furthermore, safeguarding local employee’s safety has been more addressed (Mzembe, and Downs, 2014).
Advocates of CSR believe that CSR is a major breakthrough to solving majority of the social issues that the government has failed to address. In addition, they also argue that knowing that an institution is morally and socially responsible will attract more investors. However, the opponents of CSR argue that the most important goal of a business if profit generation and not social development. Other critics argue that corporate industries are not institutions meant for moral purposes (Mzembe, and Downs, 2014).
South Africa has played a major role in defining and enhancing the CSR initiatives. Nevertheless, for the CSR to be fruitful and to be properly executed in South Africa, it is important to lay emphasis on the liability and equality of businesses CSR practices. CSR is viewed as exclusively associated to big businesses which explains why there has been reluctance in smaller companies in complying with the CSR measures since they feel that their operations will go unnoticed (Bond, 2008).
Nigeria
Nigeria is one of the largest nations with the largest economy in Africa classified under developing economies. The country had enjoyed its oil and gas extractions that have contributed to its economic growth.
The country has various policies that companies must adhere to when engaging in their activities. CSR is one of the ways that oil and Gas Company give back to the society through their CSR initiative. In a study conducted by Gabriel (2007), most of the multinational companies in Nigeria dealing in gas and oil participate actively in the corporate social responsibility. The company contributes to the society through various as including, measures to curb environmental pollution, sponsorships, community services among many others (Watts, 2004). Many of the host communities in Nigeria have higher expectations in community development initiative. However, pressure from the community keeps on piling up because some of the companies do no keep their promise (Frynas, 2005).
Most of the community members are interested in the social projects that give them hope of a stable and prosperous future. The companies in Nigeria have as well embraced development initiatives to portray to the people how socially responsible they are. In some areas in the Niger Delta, they are marred with unstable environment as there is ethnic disputes and conflicts over oil revenues (Gabriel, 2007). Companies such as Shell and Oil have participated in the CSR to resolve the conflicts. Recommendations to solve the problems have as well been made. These recommendations includes, enhance further cooperation with the Nigerian government to ensure that the situation is peacefully resolved. There is also need to improve transparency in order to avoid human rights violations as well as resource exploitation. Shell has the duty to continue handling the situation to see if there would be any positive outcome.
It is therefore, evident that both developed and developing countries have embraced CSR initiatives in their countries to foster change and to achieve certain goals and aims. Countries such as Canada have put in place various measures to ensure that it protects its environment as well as contribute to social and economic development of their people. Most African countries such as South Africa and Nigeria have also embraced the concept of CSR and is transforming their them on different frontier. Even though, most developing nations have lagged behind on this area, the concept is gaining momentum on daily basis.
Conclusion
Creation of awareness is a major trend occurring in most extractive industries all over the world. Integration of the CSR programs with the functioning of the extractive industries has resulted to development of multiple benefits in both developed and developing countries. In addition, there has been contribution of the implementation of CSR policies by the international community. Some extractive companies in the developing countries however, have remained reluctant to adopting CSR strategies as a component of their conventional business. Most developed countries have successfully implemented CSR strategies to advance different interests. The developing countries such as Congo, South Africa and Botswana among others are in the process of putting in place such strategies to impact positively on the society, and environmental.
There has been great impact in integrating CSR into the business strategies of the extractive industries .The benefits of such integration has resulted to robust impact on both the appearance and the accomplishments of a company. Extractive industries all over the world continue to seek opportunities to comprehensively capture a greater proportion of the benefits of resources extraction and at the same time ensure that they develop the community that they operate in. Local governments should support their extractive industries so as to ensure that they in the best way reap the benefits that accompany the implementation of such. Upcoming small and medium sized industries should also be encouraged to adopt such strategies. Besides, large mining industries should be taught on the benefits that accrue the implementation of CSR industries.
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